On October 31, 2017, Lexington Corp. declared and issued a 12% common stock dividend. Prior to this dividend, Lexington had 302,000 shares of $.001 par value common stock issued and outstanding. The fair value of Lexington's common stock was $16.75 per share on October 31, 2017. As a result of this stock dividend, the company's total stockholders' equity

Question

Business

Amy

16 May, 02:00

On October 31, 2017, Lexington Corp. declared and issued a 12% common stock dividend. Prior to this dividend, Lexington had 302,000 shares of $.001 par value common stock issued and outstanding. The fair value of Lexington's common stock was $16.75 per share on October 31, 2017. As a result of this stock dividend, the company's total stockholders' equity

+3

Answers (1)

Know the Answer?

Liliana Davenport · Answer 1

The total equity suffer no change.

Journal entry:

Retained earnings 607,020 debit

Common Stock 362.4 credit

Additional Paid-in 606,657.4 credit

Explanation:

Stock dividends reduce a equity account - -> retained earnings

And also, they increase equity accounts - -> common quity and additional paid-in in excess of par.

value of the stock issued:

302,000 shares x 12% = 36,240 shares

36,240 shares x $16.75 = $ 607,020

Common stock: 36,240 x 0.01 = 362.4

Additional paid in: 607,020 - 362.4 = 606,657.6